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QUEST MEANS BUSINESS
Brazilian Victims of Plane Crash Head Home; U.S. Employment Hits Nine-Year Low; Referendum Campaign Wraps Up in Italy; Bank of Mexico Boss Explains Decision to Leave; Deputy U.S. Labor Secretary Discusses Trump Deal with Carrier; Study Suggests Link Between Golf and CEO Performance
Aired December 2, 2016 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] ISA SOARES, CNN ANCHOR: Markets snapped their three-day winning streak and are finishing the week flat. It is Friday, December 2nd.
Tonight, just the job, U.S. unemployment falls to its lowest level since the financial crisis. Italy's banks are in for a nervy weekend as the
country goes to the polls. And the bank of Mexico governor tells me why he's leaving for Switzerland. I am Isa Soares and you are watching QUEST
Very good evening, we'll have the rest of the day's business news in just a moment. First, the bodies of the Brazilian victims on the plane crash in
Colombian, if you remember, headed home. Right now, you're looking at live pictures from the airport in Medellin in Colombia. This is where the
bodies, including those from the Chapecoense football team are flying back to Brazil for burials. Sixty-five Brazilians where amount the 71-people
died, killed in a crash on Monday. CNN's Shasta Darlington is live for us in Medellin, Colombia at the airport. She joins us now. Shasta, talk to
us about what we're seeing right now, these live pictures.
SHASTA DARLINGTON, CNN CORRESPONDENT: Sure, Isa, I mean this is just a terribly long, agonizing wait for the relatives and the victims and the
relatives of the families of the victims. The bodies have been brought to the airport here in Medellin. They are -- the coffins in hearses, a
caravan from funeral homes. They're very simple tributes. The line the coffins up in front of these Hercules aircraft that you see out here.
There is a priest who's giving a very simple blessing, and then they load the coffins on to the aircraft. One aircraft is already taken off.
They've just loaded up a second one and it is about to take off. And they will begin the process all over again with the third aircraft.
There are 50 people being carried on these aircraft. There are some private planes who will be taking the Brazilian journalists back to Brazil,
who also died in the crash. But just an incredibly emotional and difficult time for everyone here. Also for the Colombians who've been showing so
much solidarity. Organizing tributes for the crash victim. As you can see a lot of journalists are now running by because there's going to be an
impromptu press conference with the ambassador here. He's going to talk about what a difficult moment it is, but how much they have appreciated the
solidarity from the Colombians here.
This comes days after the crash when the Lamia flights 2933 crashed into the mountains just outside of Medellin. And the bodies were relatively
quickly identified because there had been an explosion. There had been a fire. This is due to the fact that the plane was out of fuel. So, this
means that they are finally ready to be carried home, Isa.
SOARES: And Shasta, I believe many of the families of the deceased are indeed have travelled from Brazil to Medellin. I believe you have been
able to speak to some of them. What questions are they asking, if any, Shasta?
DARLINGTON: For the relatives and the families, the real issue is just getting the bodies back home. But there are lots of questions about the
investigation. While Colombia has now confirmed that the plane was without fuel, and that brings us a lot of questions. How can the flight plan have
been approved knowing they were going to arrive at the destination so low on fuel? Or was the flight plan misrepresented? The Lamia charter company
in Bolivia is now formally under investigation as well. We know that the director -- one of the directors of the civil aviation in Columbia, is
actually a relative of one of the executives at Lamia. So, a lot of questions to be answered.
We spoke to the head of Colombia Civil Aviation just a short while ago, and he said the investigation of the black boxes is going to take months. Both
Brazilian, Bolivian and even British officials are involved. So, that is going to drag on, but the focus is differently on the lack of fuel and how
that could have happened, Isa.
SOARES: For the viewers just now joining us, just so you're aware, you're looking at live pictures from Medellin in Columbia where the bodies of
those who died in that plane crash in Medellin, being now repatriated to Brazil.
[16:05:00] Many of which 71 people died, many including members of the Brazilian soccer team, football team Chapecoense. Shasta Darlington for us
in Medellin. Thanks very much, Shasta.
Now let's turn our attention to the business news. Because tonight, the U.S. economy looks like it will be in pretty solid shape when Barack Obama
hands over the White House keys to Donald Trump. New job numbers show an economy that is almost at full employment. And only a few blemishes that
need to be made right again. Unemployment was down to 4.6 percent in November. It is the lowest since 2007, as well as the lowest of the Obama
presidency, as you can see there, 170,000 jobs were added last month. That slightly ahead of expectations.
However, the number of workers participating in the labor force was down again in November nearing multi-decade lows. Manufacturing jobs are also
falling. Economist Diane Swonk joins us now from Chicago with more. Looking at those numbers, Diane, the U.K. economy looks pretty healthy.
What did you make of the U.S. numbers -- what did you make of the numbers? Are they as robust as they look?
DIANE SWONK, FOUNDER AND CEO OF DS ECONOMICS: They certainly were a solid number, that is the good news, the 4.6 percent. A little bit as you said,
because the participation rate ticked down a bit. But also, the lowest since August 2007. I think the interesting thing is they're good enough
for the Fed to raise rates in December. What we have is better wage growth than we did a year at this time, and higher inflation. So, both of those
things with the ongoing economic momentum and low unemployment, all will allow the Fed to raise rates again in December.
That said, I think it is also interesting to look at the 4.6 percent rate is not what it once was. Back in 2007, we had that another measure of
unemployment, which we call the U6. Which includes people that are marginally attached to the labor force, maybe discouraged, they have
dropped out temporarily, those that are working part-time instead of full- time, and having to choose those jobs because they couldn't find a full- time job. That unemployment rate also came down, but it 9.3 percent it is still almost a full percentage point ahead of what it was in 2007. So, we
do have that gap that really underscores the discontent we saw during the election.
SOARES: And that was exactly going to be my point. For our international audience saying look, these are pretty healthy, these are pretty robust
numbers, it doesn't really match what we have been hearing from the rest of the American population. That they want to see change, and they're not
happy, they're not feeling the benefits of a healthy economy.
SWONK: Exactly, and I think you're seeing here is, one, the gap between the sort of underemployed, people marginalized is still very large. Those
people who feel left behind are still large. And wage gains at 2.5 percent. That is up from the lows we saw earlier in the expansion, but it
is still well below what we saw in a time like 2007 and 2006 when it was closer to 4 percent. So, we also had a better composition of employment
gains. I mean, these employment gains that we've seen since this recovery, they originally started with much lower wage jobs. So, more people having
to trade down, and even though lower wages have begun to pick up, because we've seen minimum wages at the state and local level pick up, they're
still less then what people were making before. And I think that's where you sort of get lost in the aggregates and you lose what individuals are
feeling. And the gap between the overall numbers, the aggregates and then individual uncertainty and angst that we clearly saw during the election.
SOARES: So, I think it's fair to say, Diane, that you have a U.S. President-elect Donald Trump is inheriting a pretty healthy and robust
economy. Where can he do from here? Where can he take it?
SWONK: We do have a tail wind, that is the good news. Much of the things that slowed us down in the first half of the year have gone away. We're
moving into the year and if you were to do nothing, which may be best thing to do at this stage of the game. We would actually see the economy
continue to improve, and we might actually get to the point where wages are really starting to give it up more rapidly. The question is does he
overheat the economy by overstimulating with some of his program policies and take us into a lot more debt. Or does he do something really damaging
with trade in her trading relationships that then come back to haunt us later on. And that's what we don't know. The uncertainty with this
particular administration and where things go next has never been higher, which is not reflected in financial markets. Because I think they're
reading the situation in Washington as unity with one party. This is a party that was ready to throw their leader, Donald Trump, off the ticket a
month prior to the election.
SOARES: Diane Swonk, always great to get your insight. Thank you very much, good to see you.
[16:10:00] SWONK: Thank you.
SOARES: Now the top economist in the Obama White House says they're leaving the economy just the way they want it for Donald Trump. Jason
Furman told me earlier he was encouraged by today's job numbers.
JASON FURMAN, CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: I'm very happy with it. I was working on President Obama's transition eight years ago. We
were losing 800,000 jobs a month at that time. We were utterly terrified about what was going to happen. But, you know, we put in place the right
policies, and today we have unemployment rate less than half of what it was. We've had 15.6 million jobs. You've seen wages raising this year
well above the pace they were rising before we came into office. And this is exactly what we want to be handing over to the next president, which is
a strong economy that's moving in the right direction.
SOARES: Of course, a strong economy, but all of this could potential be undone by the President-elect if he is prepared to basically tear up the
rule book. Do you fear your hard work will just go out the window?
FURMAN: The American economy is very durable. It's very strong, but we also do need the right policies. We need to continue to invest in
education. We need to invest in infrastructure. We should be reforming our business tax code. We should making arc economy more competitive. And
we should make sure we're doing that while not adding a lot to the medium and long run deficit. There is more that we can and should be doing to
move forward in this country.
SOARES: You mentioned the tax code. We've heard yesterday from the President-elect, and we also heard from the new Commerce Secretary as well,
about this. Do you think the Obama administration should have done more to reform the tax code?
FURMAN: We put forward a business tax reform frame work six years ago, and I think a lot of the ideas are ones that we would like to see carried
forward and embodied in the future. And there's two really important ones. One, is we do need to cut our rate to make our economy more competitive, to
reduce the distortions. But we also need to pay for business tax reform. Because if on the one hand you're cutting the tax rate, but on the other
hand you're adding a lot to the budget deficit, then you're going to end up hurting the economy rather than helping it. So, that idea that you need to
be revenue neutral, that you need to cut up loopholes, broaden the tax base, that's a really important one that we need to carry forward as well.
SOARES: What are you most proud of in terms of what you achieved with the Obama administration when it comes to the economy. What do you think was
your main goal, and what do you think it will be for your baby or so that you've held on to it for so long.
FURMAN: Well, the first goal was to save the economy from a second great depression. And we've done that. The United States recovery has proceeded
further and faster than what you've seen in most of the major economies around the world that were affected by financial crisis. We feel good
about our fiscal response, our monetary response, rescuing the auto industry, what we have done in the financial system. But at the same time
there have been a bunch of long run structural problems. And we haven't solved those, but we've gotten a good start on them.
Something like the Affordable Care Act, people think of that in terms of covering 20 million people with health insurance. That's really important,
but it's also contributed to a dramatic slowdown in the growth of health costs and that's helping our businesses create jobs, raise wages, and lower
our budget deficit over time. So, that's a really important economic policy that gets to the structural issue in our economy.
SOARES: Jason Furman there.
Well, Wall Street fluctuated a bit after those jobs numbers. It was a mostly flat finish as you can see. The Dow down just 21 points or so.
CNNMoney's Paul La Monica is with me now. To talk about these numbers, what this means, what this means for the Fed? What you make of those
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: Yes, I think the numbers were pretty solid. We got another nice month of job gains. The drop in the
unemployment rate was obviously something that I think everyone was happy with. Wage growth did slow a little bit. That was the one negative, but
there was nothing so negative here to derail the Fed from raising rates in a few weeks. Janet Yellen is going to do it.
SOARES: So, is going to have to do it. Because she said it last meeting, there was a lack of change in major economic indicators. This points to no
reason for them not to do it, correct?
LA MONICA At this point there is really not a compelling reason for the Fed to stand pat. The question now is do they do one rate hike and then sit
tight all of next year, like they wound up doing this year? But will have to wait and see.
SOARES: What's the sense you're guessing on that.? Because I've been hearing from a couple of people that say they'll be two or three quite
LA MONICA: Yes, I think the Fed will barring a major market selloff in the beginning of the year, if that happens, then I think all bets are off. If
we have a continuation of the Trump rally, actual fiscal stimulus plans to go along with monetary policy stimulus, the Fed could probably do two or
three rate hikes and it won't derail the economic recovery.
SOARES: What about oil? We've seen OPEC reach that deal. If oil prices rise, do you think that could put the brakes on Janet Yellen's rise?
LA MONICA: That's going to be the wildcard. In the Fed, has been wanting more inflation. And oil prices going up will help that come along. The
big concern will be are higher oil prices going to dent consumer spending. If that happens, we'll see it in GDP pretty quickly, and that will be
something the Fed would not want to do and they would have to hold off on future rate hikes. But this is all big speculative bet on the consumer
having to pull back drastically because of a huge spike in oil prices.
[16:15:00] SOARES: We have seen, of course, the rally, the honeymoon Trump rally we've been having the last couple of days. But I want to ask you
about New Oriental because shares are down 14 percent, why is that?
LA MONICA: Yes, this is a company that trades in the U.S., and their ticker symbol, EDU. They are a Beijing based company that help Chinese
students apply for colleges in the U.S. There are reports on Reuters suggesting that some of what this company has done. They have falsified
transcripts for students. They have written recommendations entirely. Written applications for students. So, that's something that is now being
looked into by regulators. The stock falling 14 percent today. It was down as much as almost a quarter of its value, lost at one point, 24
percent. So, this is a company that regulators are going to be looking at pretty closely.
SOARES: Right, do keep us posted to see what they say, and us posted as well on that share price. Paul La Monica, always great to have you.
LA MONICA: Thank you.
SOARES: Now Italians are going to the polls and there is plenty, I can tell you, at stake including the prime minister's future. We'll have that
story for you, next.
SOARES: Italy is in the final hours of campaigning ahead of Sunday's constitutional referendum. A no-vote could really overthrow the government
and send shock waves right across Europe. Prime Minister Matteo Renzi, who called the referendum, is staking his political future on it. Most recent
polls suggest that he could be defeated. Renzi has hinted in fact, that he'll resign if he loses. If early elections are called, Eurosceptic,
anti-establishment parties are likely to be the main beneficiaries. They include the Five-Star Movement led by this man, you're looking at on your
screen, his name is Beppe Grillo. Some ordinary Italian is just waiting for the campaign to be over.
(BEGIN VIDEO CLIP)
PIPPO NICOSIA, MARKET STALLHOLDER (through translator): In my opinion, I'm not afraid of anything. Because I think things will carry on as before.
We don't have a strong Italy. We don't have a competitive Italy. This we all know. But for the people what will change, we might as well throw in
the towel, because no will win. Everything will collapse, so we might as well all go on holiday.
(END VIDEO CLIP)
SOARES: Some Italians found the referendum rather confusing. So, the "Yes" campaign made this video to explain really what what's at stake.
Twitted out by Prime Minister Renzi. It tells the tale of a hitchhiker whose reluctance to get in a car reflects Italians reluctance to change.
Well, in a nutshell, the referendum is about amending the Constitution. Renzi wants to limit the powers of the Senate in order to streamline the
This is what he argues. He argues that the current system is too prone to gridlock. Critics though disagree saying the changes would strengthen the
power of the Prime Minister. Well at stake is a package of economic initiatives champion by Renzi. He wants to push through reforms to get the
economy moving again. [16:20:00] Third quarter growth was 0.3 percent. And then the Italian
banks, they are grave risk if indeed Renzi loses. Many are struggling with bad loans and the no vote could derail the rescue on Monte dei Paschi.
That's the oldest operating bank.
Well uncertainty about the Italian referendum drag most European markets lower on Friday. Bancshares were among the biggest fallers you can see
there, right across the continent. Investors are worried that a no vote could plunge the Eurozone into crisis once again. Numbers pretty much
downright right across the board with the exception of the Zurich SMI.
While markets remain jittery, former European Central Bank, president Jean- Claude Trichet, told me he doesn't believe Italy's vote will cause a European drama and actually thinks Matteo Renzi will keep his job. Take a
JEAN-CLAUDE TRICHET, FORMER PRESIDENT, EUROPEAN CENTRAL BANK: I expect -- I might be wrong, because I'm not a specialist of Italian politics. But I
expect the president of the public would give Matteo Renzi again, the function to create a new government. So, even if Matteo Renzi had said at
a time that he would consider that he has to resigning, I expect that he will continue to be Prime Minister. So, it would not be necessary to be so
totally dramatic. I hope that it won't be totally dramatic.
Now to conclude that if the no vote, you have contagion all over Europe, I don't buy that, personally.
SOARES: Why not?
TRICHET: First of all, Europe and belonging to the Euro area and to Europe has proved much more resilient than was expected in the crisis. As you
know, we are 15 countries at the moment of the banking crisis. Today we are 19. The 15 remained, including Greece, including Germany, including
Italy of course, but for other countries got in. Which tells a lot on the resilience of this particular endeavor. So, I don't think it could
trigger, I would say, drama.
SOARES: Jean-Claude Trichet, speaking to me earlier. With the fate of Italy fragile banks hanging in the balance, there is still fear that's a
no-vote could have a domino effect on the entire financial system. As our Nina dos Santos finds out.
NINA DOS SANTOS, CNNMONEY EUROPE EDITOR (voice-over): For over five centuries, Monte dei Paschi has been behind some of the great moments in
history. It helped finance the Renaissance and sponsored Siena's famous Palio horse race. Now the world's oldest bank has become its most
endangered bank and the symbol of Europe's latest crisis.
FEDERICO SANTI, EURASIA Group: Monte dei Paschi is something of a special case in Italian banking system. There's no other bank that that's really
in quite -- such a dire state. And it could potentially be the first victim of our return to political instability.
DOS SANTOS: From Spain to Slovenia, euro zone countries have been cleaning up their lenders. Except in Italy where paralyzed by weak governments, the
banks were left to rack up almost $400 billion worth of bad loans. Now the country's Prime Minister wants more power to fix the problem, and to kick
start an economy still stuck in the late 1990s. To do so, he's called a referendum on changing the constitution.
DOS SANTOS (on camera): Monte dei Paschi a rejection of those changes could scuttle its plans to plug a five-billion-euro hole on its balance
sheet and force it into state hands. Another seven lenders on life support face a similar predicament. In all of this has hit shares of Italy's
banks, which are currently down 50 percent this year. Monte dei Paschi's stock is down by 80 percent.
KATHLEEN BROOKS, HEAD OF RESEARCH, CITY INDEX: Regardless of whether or not we get a yes or no vote, the Italian banks are in very poor shape and
they're going to have to have a period of intense and painful reconstruction going forward.
DOS SANTOS (voice-over): But even if Matteo Renzi wins the vote, the success of Italy's financial sector is by no means guaranteed. New laws
from Brussels have made it hard for him to bail out the banks without forcing investors to shoulder some of the burden too. That makes any
rescue package political dynamite in a country where sways of mom-and-pop savers hold some $250 billion worth of bank bonds. And surprisingly all of
this has led to a bleak mood on the streets of Rome.
UNIDENTIFIED MALE (through translator): I don't think there will be great changes in the economy. Even if they save the banks we vote for no and it
will create a great depression. I think the situation will remain unchanged, unfortunately.
UNIDENTIFIED FEMALE (through translator): I'm leaning towards the no because they're all liars. The reality is there only interested in their
privileges. Politics are filthy, even all of the publicity for the yes vote and the no vote, they're filling our heads with stupidity so you vote
for the lesser evil.
[16:25:00] DOS SANTOS: Which means the only thing Italians can bank on for now, is uncertainty itself. Nina dos Santos, CNNMoney, London.
SOARES: Earlier today, I spoke with Andrea Illy. He's the chairman of the coffee company Illycaffe. I asked him why the Italian vote matters for the
economy. Take a listen.
ANDREA ILLY, CHAIRMAN, ILLYCAFFE: Well, Italy has been waiting for reform since many decades. As a matter of fact, as a consequence of this long
wait, we lost a lot of competitiveness. We are now number 44 on the world economic forum, you know, ranking. And this is due to the fact that we
have three key economic indicators that are suffering, which are growth, debt, and employment. Of course, we shall always remember that in Europe,
countries do not control the monetary policy any longer. So, that means that the only way for one country to, let's say improve its
competitiveness, is through reforms. Which is something that is very highly requested by most of the economic institutions starting from Europe.
SOARES: If the no does win, Mr. Illy, what kind of scenarios is Italy looking at here?
ILLY: If this country doesn't reform itself, it will continue to suffer from a weakening competitiveness. It will not be able to be an actor in
Europe. Europe is tricky. Because not only it springs constraints to any European governments, about fiscal policies and any kind of reforms. And
of course, the weaker of the country, the weaker they say that his possibility to influence the European Union policy. So, this is also part
of the equation.
Then I have other points of concern. Recently coming out struggling to come out from a recession, a long recession, we started in 2008. And we
have also a few banks to recapitalize and to restructure. And of course, we will also need to have, in order to do so, a very strong international
attractiveness in order to attract foreign capitals. And it is also complicated if we go back into recession. If we go back into a situation
where there is no political stability. There are no conditions to grow the economy once again.
SOARES: I was reading your blog on this, on the need for constitutional reform, and you say in your blog, I will vote yes at the referendum. Why
did you decide, Mr. Illy, to take a public stand on this? Why does it matter so much to you?
ILLY: Because I believe that the responsibility of an entrepreneur, at this point in society, is even bigger than politicians. We are living a
very difficult moment in the society. A moment where we have a systemic unsustainability, in the economy, in the social life, and civil society.
and in the environment. We need to find a new balance, a new society founded on new technologies, on a new set of rules, and this will require
several decades. And any politician has two short time frame to do any policy which is for the long-term.
SOARES: Andrea Illy there, the CEO of Illycaffe.
As Mexico braces for the Trump presidency, we speak to its outgoing central bank chief about what he hopes for and fears from the incoming
administration, that is next.
[16:30:00] (COMMERCIAL BREAK)
SOARES: Hello, I'm Isa Soares. Coming up in the next half hour of QUEST MEANS BUSINESS, the Deputy Labor Secretary tells me he agrees with Bernie
Sanders of a Donald Trump's deal with Carrier. And how a round of 18 holes can put a hole in your balance sheet. A new study suggests CEOs shouldn't
play so much golf. First though, these are the top news headlines we're following for you this hour.
Three days after a deadly plane crash in Colombia the remains of the victims are heading to Brazil. This was the repatriation ceremony at the
airport in Medellin. Many of the 71-people killed were part of the Chapecoense football team. Investigators are looking into what caused the
The U.S. says diplomacy is still alive when it comes to finding a solution to the violence in Syria. International efforts to bring peace to Aleppo
have repeatedly failed. However, Secretary of State, John Kerry, met with Russia's foreign minister Friday. And here is what Kerry said just a short
while ago, take a listen.
(BEGIN VIDEO CLIP)
JOHN KERRY, U.S. SECRETARY OF STATE: Hopefully if the human situation could be dealt in Aleppo more effectively, and if indeed we could create a
framework for the passage of people out of Aleppo. So, that Aleppo itself might be able to be relieved from this agony. That could open up the space
to perhaps be able to start some kind of conversation in Geneva.
(END VIDEO CLIP)
SOARES: Officials in the U.S. State of Tennessee now say 13 people have been killed by this week's wild fires. But emergency crews still have more
areas to check. Fires have been burning in many parts of the Southeast for weeks fueled by the worst drought in nearly a decade.
U.S. President-elect Donald Trump says he's tapping retired Marine General James Mattis for Defense Secretary. Mattis first got the name "Mad Dog"
leading combat troops in the 1991 Gulf War. Here is what Trump said about his choice at a think you rally in the state of Ohio on Thursday.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT-ELECT: We are going to appoint Mad Dog Mattis as our Secretary of Defense. They say he is the closest thing to General
George Patton that we have, and it's about time. It's about time.
(END VIDEO CLIP)
SOARES: Mexico's outgoing central bank governor tells QUEST MEANS BUSINESS Mexico is open to discussing all issues with the incoming Trump
administration. Augustin Carstens has seven months left on the job before he then takes the helm at the bank of International Settlements in October.
I spoke to Governor Carstens. I began by asking him why he is cutting ties on his career at Bank of Mexico.
[16:35:00] AUGUSTIN CARSTENS, GOVERNOR, BANK OF MEXICO: I would say that the two main reasons, one is the fact that for a -- for a public servant, a
central banker, is a great to be designated to this position in the BIS. The BIS is the center of -- it's the bank of central bankers. It's the
main for the coordination and cooperation among central banks, and for me in particular, it means that I will be the first person to take that
position being from an emerging market.
And the other thing is that it allows me to take this step is the fact that the central bank of Mexico has a very well established and solid autonomy.
It has a great board, and the timeframe is such we will have a seamless transition.
SOARES: It may be a seamless transition, but you're leaving them at a critical time, geopolitically at least. I think it's fair to say,
relations between the U.S. and Mexico are somewhat strained. You've got the peso under pressure. And the same time as well you have a free trade
deal back and completely torn up. Does that worry you at all?
CARSTENS: Well, of course that has been something that's been in our minds. That we have been acting in response of. But again, first in the
business of concerns at the bank, we have all of the flexibility of the position to adopt the necessary measures. I will be here -- and I repeat
for seven months -- and I'm sure that the board will continue to function well. The ability that the banks doesn't depend on one person. All of the
measures that we have taken so far have been on the consensus basis. And that will continue to be the case in the future.
SOARES: Governor, you previously had said that if Donald Trump won the presidency, won the election, they would hit Mexico like a hurricane. Do
you still stand by that statement and what do you mean by it?
CARSTENS: That statement was long ago. In was in the midst of the campaign. Certainly, President-elect Trump has been -- with respect to his
policy intentions, and I will say that Mexico is open to discuss issues with his government, and to arrive at a mutually beneficial arrangement. I
mean there is a -- all of the positions from the Mexican government to work with the president Trump team.
SOARES: That is Augustin Carstens, the governor of the Bank of Mexico.
Donald Trump got plenty of publicity this week for intervenes in Carrier's plans to move jobs to Mexico. I asked U.S. Deputy Labor Secretary, Chris
Lu, if president Obama should have used similar tactics during his time in office.
CHRIS LU, U.S. DEPUTY LABOR SECRETARY: Since 2010 800,000 manufacturing jobs have been created under President Obama's watch. That doesn't even
include the 1 million jobs that were saved in the auto industry, because of the president's courageous actions. So, I think, we'll let the statistics
speak for themselves as to who has done more and who will do more for manufacturing jobs in this country.
SOARES: But that may be the case, but the weak part of the labor market is still manufacturing, is it not?
LU: Well, as I said, 800,000 jobs have been created in manufacturing and we know what some of the solutions to that is. It's having long-term
sustainable policies. President Obama has been calling for an infrastructure bill for years. We know that creates not only construction
jobs and manufacturing jobs. Those provide good middle-class wages to Americans. And so, we know what the policies are, we just need the
political will here in Washington to pursue them.
SOARES: I'm sorry to keep asking you on this question, because this is fascinating for an international audience as well as for many countries
looking in in terms of how President-elect could potentially handle the economy. We saw him intervening directly with Carrier. Picking up the
phone, trying to keep those jobs. What do you sense are the pitfalls and the advantages of intervening directly with these companies?
LU: Well look, I'll leave that to others to dissect whether that is a sustainable, scalable, economic approach. President Obama has suggested
those policies, and that's what he's pursued over the last eight years. And the product, and the success is the 15 million jobs that we've created
over the last six years.
[16:40:00] SOARES: OK, let me ask you this in this case. I read a fascinating article by Bernie Sanders, who wrote a piece for the
"Washington Post." And he basically said, companies will now hold the President-elect to account pretty much hostage to get what they want in
terms of his relation to Carrier. Do you think that is true?
LU: I will say this, as I travel around the country, I talked to employers who are committed to growing their companies here in the United States.
Because they know that there is no stronger, more dynamic entity than the American workers. And we are confident of the policies that will we have
pursued during this administration. I think Senator Sanders raises some good points about whether the policies that the President-elect will pursue
are sustainable in the long term.
SOARES: Should American workers, Mr. Lu, do you think be worried about direct interference? Presidential interference directly with these
companies. Should they be worried?
LU: Look. I think what the American workers should be concerned about is policies that stymie their wages. That hurt their worker safety, that
compromise their pensions. Under our administration, our priority has been to grow American worker salaries, their worker protections, their pensions,
because we understand that when American workers succeed, the U.S. economy succeeds.
SOARES: Chris Lu there.
Now, advisers assemble. Donald Trump puts together an "A" list group of business minds including the head of Disney, and there is nothing Mickey
Mouse about it. I'll tell you more, next.
SOARES: Now Donald Trump has unveiled the team of top CEO's to advise him throughout his presidency. They include some of the most prominent
business names in America. Disney's Bob Iger, JP Morgan's Jamie Dimond, Mary Barra of GM, and Ginni Rometty of IBM. Now other companies
represented include GE, Boeing, Walmart and Ernst & Young. Dubbed as strategic and policy forum, the group will have a direct line to Trump.
They perhaps should have come up with a better name. But they will be expected to give impartial views on how government policy impacts jobs and
the economy. CNNMoney's Cristina Alesci has more from L.A.
CRISTINE ALESCI, CNN CORRESPONDENT: Trump is assembling a group of top CEOs to get their opinion on how to grow the economy and create jobs.
These are two things that Trump really wants to deliver on. So, how did this all come together? Well, Trump called the CEO of one of the biggest
investment firms in the country, Blackstone's Steve Schwartzman. And he asked him to organize, and I'm told that Schwartzman quickly reached out to
chief executives from a cross-section of industries. Media, autos, retail, and they're diverse in their political leanings as well. But they signed
on pretty quickly.
[16:45:00] We're talking about the CEO of JPMorgan, Jamie Dimond, who was considered for the treasury spot. Mary Barra, who runs General Motors.
Bob Iger, Disney's chief. Walmart CEO, Doug McMillan, and many more. This is an interesting turn for Trump who's has sometimes been pretty harsh with
corporate America for offshoring jobs or hoarding cash overseas.
I'm told they will meet regularly with the president at the White House, and that it will offer opinions and experience. We're going to have to see
what impact it will ultimately have on policies coming out of this administration.
SOARES: Cristine Alesci there. Well, that populist message that has swept the United States is now working its way right across Europe. As we
mentioned earlier in the show, Matteo Renzi, his government faces an uncertain future depending on the result of Sunday's referendum.
Then you have France. That's already guaranteed to have a new leader. With Francois Hollande announcing yesterday, he will not run for
reelection. Then we take you to Austria. That will have a new president this weekend as they choose between an independent candidate backed by the
Greens and his far-right opponent. The chairman of Hublot, says Europe, indeed, has a problem. But the Swiss luxury watch doesn't. It's managing
to thrive even with Europe in the grip of what his chief executive Jean- Claude Biver calls a bad mood. I ask him for his views on Europe's future.
JEAN-CLAUDE BIVER, CHAIRMAN, HUBLOT: I am of course a little bit worried about what we see in Europe because we have a lot of insecurity. We have
problems of the next rotations in Italy. We have the next voting that will come up in France. So, we are, at the moment, in a certain insecurity.
And we just had the Brexit vote in Britain. So, Europe has really changed. On one side, we don't know who will win the elections in France. We don't
know who will win the elections in Italy. And we have the problem of the Brexit. That is quite a lot. Maybe one day well have the problem of
Greece coming back. So, Europe has a problem and Europe will have to come over and to find a solution to itself. Then we have the embargo to Russia,
which also doesn't help. We have war close to Europe in Syria. We have all the refugees coming. So, my goodness can we have more. I mean, we are
really in a problem. But we have now a challenge. We have to solve these problems.
SOARES: And we have a new president of the United States. So, with so much insecurity, with so much uncertainty, how do you go about with a
strategy of a business like yours, the size of yours? What do you look at?
BIVER: We are very dependent of the economic situation of the countries. We also are dependent on some decisions that governments are thinking about
taxes. Or the government in China. We have the reduction of our sales of the Swiss watch industry in China because of the government of China and
made some interventions in taxes. Made some interventions in the importation of watches from the Chinese tourists. And they wanted to fight
bribery. So, we are dependent on political situations. We are dependent on economic situation. We are dependent on finance situation. When the
stock market goes up it's always good for luxury. When the stock market goes down is not so good. So, you see, we have to work with a lot of
factors that we don't control ourselves.
SOARES: The reports out there are that there is a crisis within the Swiss luxury watch industry. Your brands don't seem to be in that crisis. Are
they right? So, what are you doing right that others aren't?
BIVER: Probably what we are doing right is that we are very, very extremely active. Number two we are extremely creative. Innovation and
creativity is the best way to fight a bad mood. Number three, we have very strong presence in the accessible luxury. And accessible luxury today is
also one of the answer to the crisis, and because of those three reasons, we have up 15 percent, when our industry is down 11. So, you see we are
performing quite well.
SOARES: I was reading a statement, a quote actually, by you. You said, "Customers want perceived value that is higher than the price." So
basically, a watch that looks expensive, but perhaps is not that expensive.
BIVER: That is also one of the key of our success. We are working heavily on the perceived value. We want to have a perceived value that is always
at least 1.5 to two times higher than the retail price.
[16:50:00] That's the best way to convince the customer that he is doing the right choice. That he's paying the right price when the perceived
value is superior.
SOARES: Now the golfing habits of some CEOs handicap their companies. Some fascinating research coming up. First though, a highlight coming up
from "MAKE, CREATE, INNOVATE."
SOARES: Golf is back in the headlines with Tiger Woods making a return to the links after a 16-month absence following back surgery. We're also
finding out too much golf it seems, may be a bad thing if you're the CEO of a company. A new study, in fact, says mixing business and golf may impact,
not mix. Well, the report in the Harvard business review says, the longer the CEO has been on the job the more golf they play. CEOs with less money
invested in the company tend to play more golf. And then perhaps most boring of all, companies whose chiefs golf the most, returns 1 percent
lower than average.
Let's get more on this. Eric Saperstein is the author of the "Business Golf Handbook". He joins us now from Orlando, Florida. Thanks very much
Eric for joining us here. I suppose it's kind of obvious, isn't it, if you play too much golf it might not be good for your business. So, what does
this report tell us that we didn't already know?
ERIC SAPERSTEIN, AUTHOR, "BUSINESS GOLF HANDBOOK": Well Isa, it's harder to really know if that's true or not. Because the report even admits that
they may have taken some leeway here or there to come up with their conclusions. As a matter of fact, they said that CEOs who are in tenure or
longer don't do as well as the ones with shorter tenure. And I would argue that over the course of a longer period of time versus now, we're in a
digital age and were in the digital business world. And some of the older CEOs may have in fact, been phased out and some of their strategies may
have been out. I would argue that CEOs are leaders and titans of industry, and they're not to handle the day to day of an organization. So, going out
on a golf course for a 4 to 6 hour. Could in fact help. It gives them time to think away from --
SOARES: How so? SAPERSTEIN: -- well it gives them time to think without the stimuli of having a mobile phone or distractions, and really concentrate on the future
of an organization, rather than the day-to-day. And that's really what a CEO needs to focus on is the future.
SOARES: Sure, but the rest of the employees won't be happy. So, the numbers may be okay at the end of the quarter, but optics, I don't think I
would be pleased if I found out my CEO is spending four to six hours a day golfing.
SAPERSTEIN: I totally understand where you're coming from, but you also have to understand who he or she may be playing with. If in fact, they're
playing with a business partner and they can establish that rapport and establish that relationship, they're going to build an emotional
And I head up a business program here in the U.S. at Full Sail University. We teach our students, and we focus on the entertainment business, that the
key to the entertainment business is monetizing emotional connections. And I think I could successfully argue there is no better place to establish
that emotional connection than on the golf course.
[16:55:00] And once you do and once you really like that person, and they like you, you're not going to look for the best deal to do business, you
look to your friend and someone you know and you like. And that's just how it happens. The golf course is a great place for that.
SOARES: I should spend more time on the golf course. Eric, if we look at the report, what is the average CEO, he or she, how long do they spend
playing golf and how does that compare for example, to the bottom line?
SAPERSTEIN: Well, it definitely varied. The studies that I have in my handbook show that golf correlates very well with success in business. And
that could be for several reasons. One reason is on the golf course, you learn a lot about your business partner, or your college, or you're someone
that you're going to do business with, your perspective colleague, because there are certain etiquette that you have to follow, certain rules that you
have to follow. And you can learn a lot about them. For instance, if I hit my ball in the water and my reaction is to throw my club across the
green, that's going to tell me one thing.
But if I'm calm, cool, and collected, --
SOARES: Your mad.
SAPERSTEIN: -- yes, your mad. But if I'm calm cool and collected, that's going to tell me something else. The golf course can reveal so much about
a person and so much about a person in business, I would argue that it's not a bad thing and that the person in the business, they wouldn't want
their manager on the golf course very often. But they're CEO, that is a good place.
SOARES: Is a shame that ordinary workers can't spend that long in the golf course. It all that for CEOs. Lucky, he or she. Eric, great to see you,
thanks very much. Fascinating.
SAPERSTEIN: Thank you.
SOARES: If you want a daily digest of the top business stories delivered to your inboxes -- sports as well -- subscribe to the QUEST MEANS BUSINESS
newsletter and go to CNNmoney.com/quest to subscribe. Richard has been very busy in Finland, as you can see from the tweets. Doesn't he look
dashing there? That is QUEST MEANS BUSINESS. I'm Isa Soares in New York. Have a wonderful weekend. Richard is back, you'll be happy to hear, next
week. Thank you for having me.